September 26, 2010

GUEST VIEW: From Ben Ilfeld of the Sacramento Press: Why the iPad is no savior for publishers

Bill Densmore notes: We talked to Ben Ilfeld, COO of the online-only Sacramento Press, at a conference a few days ago in Chicago and found we agree that the initial rush of publishers to view the Apple iPad as a savior for their business is misplaced, for two reasons: (1) Apple controls the user and (2) Apple controls the platform. It's akin to putting your subscribers and your presses in a black box with no key. In this guest post, Ben explains.

American mass media is built on the ownership of the means of production, distribution and broadcast by a few large corporations. These monopolies control closed systems and sell scarcity. The newspaper itself is a completely closed system. If it is in the paper, management has signed off -- that simple. Barriers to entry are high, like building a factory to produce newspapers and a fleet of trucks to deliver them.

The Internet, on the other hand, is a network of networks and operates mostly as an open system. The barriers to entry are much lower -- competition is more fierce, and information can be replicated at costs approaching zero.

Even worse, the Internet is much more a set of communications protocols than a media consumption platform. Social media and blogs represent the most popular activities online. All of these things make doing business the same old way very difficult for American mass media outlets.

When Steve Jobs introduced the iPad there was a sort of euphoria among some executives (one more) at mass media companies. Aha, Here is a closed system! Here is a place where we can dream up something beautiful and replication will be tough. Here is a place where we can act just like we used to act.

Even then, most technologists and economists thought this kind of thinking was silly. For one, the iPad was great at accessing the open web. Two, the iTunes App store was closed, but still had low barriers to entry unlike, say, building that printing press. Three, and most importantly, the mass media would not own the keys to the closed system -- Apple would.

Apple makes and sells the scarce resource: the iPad itself. Apple takes a healthy cut of app revenue. And when Apple sees something like ads making money in its sandbox, it can trump the competition with its own product that uniquely benefits from deep integration with the device, iAds.

Now is a good time to look back and revisit the issue. We know that Apple has one an amazing job marketing and selling iPads. Has this benefited mass media? Not enough that anyone is breaking out any reports or numbers. In fact, there are already examples of third-party developers creatingsuper-valuable ways to access news -- by aggregating sure to anger some original creators.

What seems clear is that Apple is and will be the big winner here. The mass media have been relegated to being . . . wait a minute, they have been relegated to being content producers. And mass media ought to know how little there is to be made in that profession, just look at the paychecks theysend out to their writers and editors!

Stinging a little

This is gonna sting a little: Closed systems and high barriers to entry made for monopolies that are slipping away as the latest wave of open systems with low barriers to entry reach their peak. Instead of retooling and finding new scarcities they could sell to partners, some executives hoped to jumpinto a new closed system for the comfort and safety of their old business models. But upon entering the cave they found high competition and a devaluation of their own competencies. They are weaker than ever and caught relying on someone else's means of production for their livelihood.

I'm excited about the possibility of touch computing, but The Sacramento Press (an online-only, local new source) is built to play on the current dominant topography of the open Internet. It is in our interest to push for increased openness and competition. It is also our job to draw out what we do really well, then sell services to our partners to make money.

Sometimes this is online advertising, sometimes it is consulting on social media engagement, and sometimes it is distributing fliers at neighborhood events. We monetize our connection to our community online and in person. One thing we won't be doing is waiting for any device to free us of the competition or openness of the new media ecosystem.

Comments

I guess, journalism and publishing will undergo a massive shift. Days of few large publishers and associated journalists are gone, in my opinion. In a few years, the way we publish news, views and other contents will change greatly. So it is not a matter of iPad; we have to see how internet technology changes the publishing world.

Nice explanation of why the iPad won't save Publishers. But you mentioned Journalism, and didn't support that topic.
Journalism is undergoing a huge devaluation because of simple Supply and Demand. When there were 4 closed, local outlets per market, then each of those outlets needs to have a full staff of reporters and journalists to compete.
But in today's world, where most of the local news (in any medium) is just rehash of AP stories, and every consumer has access to tens of thousands of outlets, the need for local staff is hugely reduced. I'm saying a 90% reduction in demand, but I might be crazy.
There were over 15,000 reporters at the last Democratic National Convention. More than three journalists for every delegate. Thousands - literally thousands - of reporters for each nominee. No industry can survive in the face of such redundancy.
I'm all for democratic media, but that's just noise.